When purchasing a car, one of the key questions many buyers have is what they should do with their old vehicle. Given the quantity and frequency of commercials on television and radio inviting drivers to donate their old vehicles, this isn’t an uncommon question.
From a financial standpoint, drivers thinking “I should sell my car” should also do what they can to make sure their old vehicle gives them the maximum flexibility and advantage in the purchase of their new car. Unnecessarily giving up equity or just giving away the old vehicle to avoid hassle are two of the fastest ways to get a bad deal started, especially at a dealership. Here are some things to consider.
Equity
If you are making payments on your car, it is a rather trivial matter to determine what your equity stake in the vehicle actually is. In fact, your finance company might just hand over that information if you ask. Armed with accurate numbers, it will be a trivial matter to recover full value from a trade or sale.
State Regulations
Among the several things you’ll need to keep in mind if you decide to join drivers who are thinking “I should sell my car,” are the various regulations your state will have regarding transfer of title, registration, emissions certification and a legally sufficient bill of sale. It is worth a trip to your Department of Motor Vehicles to obtain the most current rules, preferably in writing. Some agencies offer packets of information for vehicle sellers to make sure you check all the boxes. This is something you don’t want to overlook, as problems will arise if you attempt to sell or trade your new vehicle later.
Actual Trade-In Value
Certified Public Accountants would face nearly insurmountable problems untangling math around the average vehicle purchase. Knowing for sure how much cash value you actually received for your trade-in is likely beyond reach. A better approach to trading in a car is to ask the dealer to reduce the purchase price by your proposed value and put the trade-in value at one dollar. From an accounting standpoint, you get the same benefits and at least you will know you got something approaching the actual value of your car instead of nothing.
Which is Preferable?
Depending on the deal you strike, you can probably get a higher cash value for your car if you’re willing to sell it yourself. Naturally, this will take longer than going to a dealership and just handing them the keys, but at a dealer, you’re constrained by the fact your “buyer” has to leave room so they can get back-end value from auctioning your old car off later.
If you sell on your own, you’ll be responsible for the paperwork, and also for some minimal costs if you have to obtain certification for emissions and/or pay taxes or pay off a note. This can reduce your value slightly, but again depending on how much equity you have in the car, it might be worth it.